Question:
During 2013, Rogue Corporation reported sales revenue of $600,000. Inventory at both the beginning and
end of the year totaled $75,000. The inventory turnover ratio for the year was 6.0. What amount of gross
profit did the company report in its income statement for 2013?
Answer:
Inventory turnover ratio = Cost of goods sold Average inventory
6.0 = x $75,000
Cost of goods sold = $75,000 x 6.0 = $450,000
Sales – Cost of goods sold = Gross profit
$600,000 – 450,000 = $150,000
During 2013, Rogue Corporation reported sales revenue of $600,000. Inventory at both the beginning and
end of the year totaled $75,000. The inventory turnover ratio for the year was 6.0. What amount of gross
profit did the company report in its income statement for 2013?
Answer:
Inventory turnover ratio = Cost of goods sold Average inventory
6.0 = x $75,000
Cost of goods sold = $75,000 x 6.0 = $450,000
Sales – Cost of goods sold = Gross profit
$600,000 – 450,000 = $150,000
